Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Save Thousands on Your Tax Bill by Lowering Your Property Assessment

As a new Congress gets underway, the typical populist clamor is emanating from Washington. But the oft-cited mantra of "cut taxes and slash spending" may be causing an unintended consequence: When Congress cuts federal taxes and spending programs, states and municipalities end up with fewer federal dollars. State and local governments are then left to make up the difference on their own.

And which tax is usually first to be raised? If you're a homeowner, you already know the answer: property taxes.

Homeowners -- because they are perceived as more well-to-do than renters -- are a tempting source of money for local officials struggling to find the money to pay for police, fire, schools and public works.

But here's something your local officials probably won’t tell you: You don't have to take this lying down.

Don’t get mad; get smart. You can fight the powers-that-be by appealing your property tax bill.

Investing some time and effort in the suggestions outlined below could result in an immediate reduction of your property taxes. Over time, the effort you invest today can add up to thousands of dollars in savings. Here's how to do it:

1. Determine if your assessment is fair. The National Taxpayers Union estimates that a remarkable 60% of properties are over-assessed. Property taxes are peg so according to these numbers, chances are good that your home is over-assessed, and therefore, overtaxed.

That said, it's probably obvious that the very first thing you need to do is head down to your property assessor's office to dig up a copy of your property assessment.

Even though the brutal recession depressed home values in almost every jurisdiction, many localities have continued to over-assess homes as a way to keep revenue flowing into their coffers. So compare your local assessor's claims to what you know your home to actually be worth. If you don’t know the value of your home, hire an independent appraiser or a real estate agent to give you their opinion as to your home's value.

2. Make your case. Prepare your argument around one of two premises: 1) The assessor made an error in your home's valuation due to misinformation; or, 2) The assessor failed to assess your home the same way he/she assessed comparable homes in your neighborhood.

If you plan to argue that the assessor is misinformed as to your home’s physical condition, double check the description of your house, including vital facts such as square footage, number of bedrooms and bathrooms, etc. Check the description against appraisals you have in hand and be ready to point out discrepancies.

If you choose to argue that comparable homes in your neighborhood are pegged at a lower value, pull together data about the assessments of your neighbors’ houses. You can find the values of these similar homes in the assessor's office. It's all public information and you have a right to view it, even if it's not your house. If they're different from yours, try to pinpoint the differences between your homes that could account for these distinctions.

You can also ask your real estate agent for comparables on homes recently sold in your neighborhood. If homes in your area recently sold for $200 per square foot, but yours is assessed at $300, you have a powerful statistical weapon in your argument.

It's common for homeowners to discover that homes similar to theirs are assessed at a far lower value because of some quirk in the property (maybe it's a few feet closer to the highway), resulting in far lower property taxes. This reality exists throughout America, but homeowners never take the trouble to unearth these discrepancies.

3. Appeal your assessment. When you've finished gathering data, it's time to launch an appeal.

First, set up a face-to-face meeting with officials in the assessor's office. It’s important to make sure you’ve already done adequate research and built a logical case before heading into your first meeting.

If you make a convincing case, you may be pleasantly surprised to learn that the assessor agrees with you and lowers your assessment on the spot. If not, then you have to take matters to the next level by requesting a hearing. Ask when the next hearing is scheduled and request one for yourself.

Take the time to prepare a thoughtful, well-documented presentation. Stick to the facts – don’t use this valuable time to rail against local ordinances or taxing authorities. It’s neither the time nor the place.  Present photos and well-organized documentation for as logical and persuasive an argument as possible.

Is all of this worth the time and effort? You bet. According to real estate experts, roughly half of the people who appeal their property taxes win a tax reduction. Even if you challenge your property taxes and lose, the process is still a valuable lesson in how your property is assessed. Who knows when that information might come in handy in the future?

One useful website of note is overtaxedproperty.com, where you can find free research materials and further information on the process of appealing your property assessment.